Margin

To trade on margin you only deposit a fraction of the overall value of the trade.

For example in CFD trading the initial margin is typically as little as ten per cent, eg. £1,000 for a CFD in £10,000 worth of shares, thus allowing you to make a much larger potential investment than if you were to buy the shares outright. This translates into much higher profits if you invest the right way, but also much larger losses (which can be protected by stop losses or guaranteed stop losses) if you invest the wrong way.